Dropshipping – an online retailing without inventory, packaging, and shipping, only profits – is it worth it? To find out, you should continue reading this.
The concept of dropshipping is quite simple; all you need is to make a list of the products you want to sell. And then, let a third party do the manufacturing, the packaging, and the shipment of the product directly to the customer. In other words, dropshipping is an order fulfillment method that does not require its seller to keep the products in stock.
It may seem like a smart way to make a cut, but is it worth it?
If you are considering dropshipping, weighing the Pros and Cons is a smart move to conclude if this type of business venture is worth it. Here are a few advantages and disadvantages of dropshipping:
#1: The start-up cost is affordable
Dropshipping isn’t expensive since it does not require an actual store to sell products. Dropshipping allows you to sell products online. As well as it helps you discover products that are sellable to a target audience without dropping a huge amount of money. Plus, dropshipping eliminates the risk of unnecessary expenditures on unsold products.
#2: Wider range of products
Another advantage of dropshipping is its wider range of products. Recently, dropshipping has been gaining popularity within the business sphere, where it becomes easier to find suppliers on various products that support dropshipping businesses. Also, there is a huge opportunity to discover new products and sell them without risking unnecessary product spending.
#3: There’s less risk
Since you are not using a huge amount of money on products that might not sell at all in dropshipping, there’s less risk of business failure. In dropshipping, you only do transactions with a third party on particular products that the customers had chosen. Plus, the third-party (product manufacturer or official distributor) will do the packaging and shipment of the product without you spending too much – less risk guaranteed profit margin.
#1: Low profit
While you’ll get a guaranteed profit with dropshipping, there’s a low profit in this type of business.
In dropshipping, you’ll get products at their wholesale prices or closer; however, you have to pay certain fees on services that the drop shippers perform on your behalf. For instance, the customer paid for a product online. Now your role is to pay the supplier for the processing and the shipment of the product. However, on the brighter side, the fees aren’t too big that will cause a deficit. The thing is, in dropshipping, the profit margin is frequently low.
#2: There is high competition
Although there is a huge possibility of a low-profit margin in dropshipping, more and more business venturers are attracted to how dropshipping works. So, with several new entrepreneurs trying dropshipping, odds are, getting noticed quickly in this industry becomes challenging, especially when most new dropshippers have a similar target audience.
So, is dropshipping worth it?
Dropshipping, like many business ventures, can be a roller-coaster ride. However, if with determination and knowledge about how dropshipping works, this type of business is worth it.